Korea Inc. expects a tepid 2016
The Federation of Korean Industries (FKI) said its survey of 285 out of the top 600 companies by revenue showed that 39.3 percent predict economic growth next year will register 2.5 percent to 3 percent, and 35.3 percent predicted a range between 2 percent and 2.5 percent.
Respondents who said less than 2 percent accounted for 15.6 percent of the total, and only 9.8 percent had the optimistic outlook that the national economy would grow 3 percent to 3.5 percent.
Government bodies and state-run think tanks are relatively more upbeat about the prospects for next year. The Ministry of Strategy and Finance forecast 3.5 percent growth, the Bank of Korea forecast 3.2 percent, the Korea Development Institute forecast 3.1 percent and the Korea Institute of Finance forecast 3 percent.
“Companies are planning to solidify their internal management by taking measures such as restructuring,” said Hong Sung-il, head of the fiscal and finance policy team at the FKI. “Government-level support, such as enacting a special bill to facilitate corporate restructuring and completing labor reforms, is urgently needed to that end.”
The corporations’ view of growth this year was even worse. Ninety-eight percent of the respondents said the Korean economy would post less than 3 percent growth, and 49 percent of that group predicted the figure would be between 2.5 percent and 3 percent. Over half of the respondents noted that their own revenue this year fell short of targets set at the beginning of the year. Only 19 percent replied that revenues exceeded initial targets.
Almost half of those respondents cited the double whammy of sluggish local demand and falling exports as the biggest problems for the economy. Almost a fifth mentioned intensified competition in markets abroad, including China, whereas 10 percent came up with increased production costs due to a rise in raw material prices.
Various risk factors - both internal and external - are expected to make next year difficult. Twenty-seven percent of respondents cited slowing growth in China and other developing economies, 26 percent cited interest rate hikes in the United States and lingering instability in international financial markets, and 20 percent cited uncertainties in currency values and raw material prices.
BY SEO JI-EUN [seo.jieun@joongang.co.kr]
with the Korea JoongAng Daily
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